LONDON, July 30 (Reuters) - European shares closed lower on Wednesday, as strong U.S. growth failed to offset some weak earnings reports and concern the conflict between Russia and Ukraine will escalate.

The index extended losses in the afternoon as NATO said the number of Russian troops and weaponry along the border with Ukraine was increasing to “well over 12,000”.

Fighting between Moscow-backed rebels and government troops has intensified since a Malaysian airliner was shot down earlier this month.

“(The threat of) war is the main drag on markets this afternoon,” Mike Reuter, a broker at Tradition, said.

French oil major Total fell 4.9 percent after saying that it had stopped buying shares in Russia’s Novatek the day of the downing of a Malaysia Airlines flight over Ukraine.

Portugal’s PSI 20 fell 3.3 percent, underperforming all major European indexes, as retailer Jeronimo Martins and Banco Espirito Santo each fell more than 10 percent.

Jeronimo Martins is struggling with deflation in its two main markets, Poland and Portugal, and BES fell amid concern it will report a loss later on Wednesday and will require a capital increase.

U.S. GDP FAILS TO COMFORT INVESTORS

European investors failed to benefit from data showing U.S. economic growth accelerated more than expected in the second quarter, partly due to inventories.

The GDP report was released hours before Federal Reserve officials conclude a two-day policy meeting. It could fuel debate on whether the central bank needs to raise interest rates sooner than expected, a move that would affect borrowing costs globally.

“The Federal Reserve was expecting a rebound, and I don’t think they are going to be too heavily swayed by these changes,” John Clarke, chief investment officer at GHC Capital Markets, said. “My concern about European equities is that investors are discounting too much in terms of European economic recovery.”